By Lee Allphin, Employer Advantage Founder and Chairman of the Board
Employer Advantage is sharing important information to guide our clients in receiving forgiveness for their Paycheck Protection Program (PPP) loans. Please contact us if you would like further assistance during the Coronavirus pandemic or with any of your other Employee Administration and Compliance responsibilities: Info@EmployerAdvantage.com | 877.476.9520
On November 18, the U.S. Treasury Department and Internal Revenue Service (IRS) issued guidance clarifying the deductibility of expenses where a business received a PPP Loan.
The guidance is in relation to the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year in which the loan was received.
This updated guidance states:
“Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible. This results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket.
If a business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not. Therefore, we encourage businesses to file for forgiveness as soon as possible.
In the case where a PPP loan was expected to be forgiven, and it is not, businesses will be able to deduct those expenses.”
The issued guidance also states that it aims to treat small businesses fairly and encourages any business that has received a PPP loan file for forgiveness as quickly as possible.
HOW TO APPLY FOR LOAN FORGIVENESS IF YOU ALREADY HAVE A PPP LOAN
To achieve loan forgiveness, Employers must be diligent about documentation and compliance with the loan guidelines as well as be sure to fill out the Loan Forgiveness Application.
- Borrowers should first check with their lender to determine whether the lender has their own form, and what other documents they will need.
- Click here for the newly revised PPP Loan Forgiveness Application and instructions.
- Complete basic company information on the main Loan Forgiveness Calculation form
- Complete Schedule A Worksheet to see if you meet the headcount and pay requirements
- Complete Schedule A to find your payroll and compensation costs
- Complete the rest of the Loan Forgiveness Calculation Form to determine your total eligible costs and our forgiveness amount
- In addition, the SBA also released an “EZ” version of the PPP Loan Forgiveness Application for companies who qualify in any one of these three categories:
i.) Borrowers who are self-employed and do not have employees, and did not use any employee salaries for the computations on the Borrower Application Form, OR
ii.) Borrowers who did not reduce employees’ wages by more than 25% and did not reduce the number of employees or the average paid hours of employees, OR
iii.) Borrowers who experienced reductions in business as a result of government COVID-19 directives regarding sanitation, social distancing, or other safety requirements, but did not reduce employee wages by more than 25%
- The lender has up to 60 days to review the application and issue a decision to SBA, and request payment for the forgiven amount. The SBA then has up to 90 days to review the loan application and remit the appropriate forgiveness amount to the lender.
For more information regarding filling out your PPP Loan Application, please contact us: Info@EmployerAdvantage.com | 877.476.9520
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A New Path to HR Bliss – Trusted for more than 30 years, Employer Advantage frees you from the administrative and compliance burdens of having employees so you can focus on your business success. Versatile enough for companies of all sizes, our unique service combines comprehensive management of your employee administration and compliance with the latest software solutions, tailored to meet your individual needs and company culture. Our full-service management of HR, payroll, health and benefits, workplace safety, and more, enhances your profitability while reducing the costs and risks associated with employment law compliance. We provide your employees with top-notch assistance and benefits that help you increase productivity, save time and money, and attract and retain a talented workforce. And for small and mid-sized businesses, we bring you economy of scale with access to Fortune-500-level benefits, specialty assistance, and savings that would not be possible to attain on your own. Headquartered in the Midwest and serving more than 400 companies and 10,000 worksite employees throughout the country, Employer Advantage is an IRS-Certified Professional Employer Organization (PEO) (C-PEO). Experienced, certified, and trusted. www.EmployerAdvantage.com